Friday, 16 October 2020 17:29

How Oil Could Benefit from a Blue Wave

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(Houston)

When you think of oil, you don’t normally think of an industry that would gain from a big win by Democrats in an election. But as it happens, oil could very well gain if Democrats sweep the presidency and congress. The reason why is slightly perverse, but that makes it no less relevant. The concept is that Democrats would be bring new regulation around fracking; specifically, regulations that limit new drilling but allow existing projects. What this would mean is a steady rise in prices as inventory becomes constrained as the recovery proceeds. For example, Morgan Stanley is forecasting almost a 100% gain in natural gas prices next year.


FINSUM: Oil and gas are a physical supply and demand market, and if regulations keep supply in the ground, then prices will rise.

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